Marchionne No Fan of Union Seats on Corporate Boards

THE HEADS OF CHRYSLER AND THE United Auto Workers union get along, but Fiat and Chrysler CEO Sergio Marchionne rejects the idea of “co-determination.”

The German method of union-management relations, where union members sit on company supervisory boards, has UAW President Bob King's support.

Marchionne rejects it on principle.

“The best intervention that the unions or labor or organized labor can bring to the party is a support for the choice of the right leader to lead the organization,” Marchionne tells journalists after he and King make presentations at the Management Briefing Seminars.

“I understand Bob. I understand what he's saying, (but) we have to be very careful that we don't exaggerate the value of co-determination,” Marchionne says.

“For multinational companies, it becomes almost impossible to find the right mix of labor representation to effectively stand in for the labor force across the group.”

Fiat has six or seven unions in Italy, but half the workers in the auto maker's plants are not organized at all, Marchionne says.

Fiat also has plant workers in Brazil and will have them in China, when a joint venture with Guangzhou Automotive Industry Group goes into production with a new C-segment sedan next year.

“Co-determination gives rise to two decision-making bodies,” Marchionne says. “The executive board makes decisions. And the unions sit on supervisory boards, one of which is the choice of the CEO.

“The most fundamental and difficult decision that a board makes is the choice of a CEO. If you make the right choice, issues with labor unions will not arise.”

Marchionne, 59, indicates he might retire around 2015. “We'll leave earlier or later, as the case may be. There's going to be a guy after me, I guarantee you.”

He says he believes his successor should come from the inside and that Fiat-Chrysler's new Group Executive Council of 22 members from nine nations “is designed to be a proving ground for people to sit and manage.”

Besides choosing a CEO, Marchionne says, company boards “have an obligation to maintain a level of equilibrium” in pay levels between executives and workers, to make “the management of the human resource part of the organization doable.”

For complete coverage of the CAR Management Briefing Seminars, go to:
wardsauto.com/reports/2011/mbs